Genesis Global Trading Settles with NYDFS After $1 Billion Lawsuit
Genesis Global Trading has reached a settlement with New York’s Department of Financial Services (NYDFS) following a $1 billion lawsuit filed in October 2023. NYDFS Superintendent Adrienne A. Harris revealed that as part of the settlement, Genesis will surrender its BitLicense and cease all operations in New York. Additionally, the company has been fined $8 million due to charges related to anti-money laundering (AML) and fraud.
The NYDFS accused Genesis of failing to maintain a functional compliance program, thereby exposing investors and customers to significant financial risks. The regulator conducted two assessments, which revealed inadequate AML and cybersecurity systems at the crypto trading startup. Notably, the company also lacked a dedicated compliance chief.
Settlement Follows $1 Billion Crypto Fraud Lawsuit
The settlement comes after the filing of a $1 billion crypto fraud lawsuit against Genesis, its parent company DCG, and crypto exchange Gemini. The lawsuit alleged that the three entities were involved in orchestrating a massive fraud scheme that harmed numerous investors.
Genesis is currently facing multiple litigations in relation to the 2022 FTX collapse and subsequent bankruptcy. The company sued Gemini for $690 million, claiming that the exchange benefitted at the expense of its creditors. Both firms have faced regulatory scrutiny over Gemini’s Earn product.
Hot Take: Genesis Global Trading Faces Consequences for Compliance Failures
Genesis Global Trading’s settlement with NYDFS serves as a stern reminder of the consequences for non-compliance in the crypto industry. With fines and the forfeiture of its BitLicense, Genesis is paying a high price for its failure to maintain a functional compliance program and ensure proper AML measures.
This case highlights the importance of robust compliance systems and dedicated compliance personnel in the crypto space. As regulators continue to crack down on fraudulent activities, companies must prioritize regulatory compliance to protect investors and customers from financial risks.
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